A parent who wishes to transfer their property to their heirs (i.e. to their children) may do so in the following ways:[1]
Α. Parental benefit
- Content of parental benefit:
A parental benefit is a contract between a parent and a child whereby the parent transfers their property to their child without consideration in order to support the child’s family, financial or professional status.
This grant of property may be:
- transfer of full ownership of the movable or immovable property in which case the parent ceases to have any power and all rights to the movable or immovable property are transferred to the child.
- transfer of bare ownership to the child and retention of the usufruct by the parent.
This means that the parent, as the usufructuary, can use the property to satisfy their needs or otherwise enjoy the benefits of the property, such as by entering into a lease agreement and collecting the rent. They cannot, however, transfer the property (see Article 1142 of the Greek Civil Code). On the other hand, the child acquires the bare ownership, i.e. ownership which lacks the above-mentioned powers, which are now held and exercised only by the usufructuary.
The usufruct ceases to exist (is terminated) upon the death of the parent (unless otherwise agreed according to Article 1167 of the Greek Civil Code), at which time the usufruct is united with the bare ownership and the child acquires full ownership and all powers associated with the property, without any further procedure.
- Procedure for drawing up a parental benefit:
- For parental benefit of real estate, a declaration is drafted and submitted to the competent tax office (D.O.Y) and a notarial deed is drawn up and signed by the providing parent and the child, following the submission and verification of the necessary certificates.
Afterwards, a copy of the parental benefit contract is registered at the competent Land Registry Office.
- For parental benefit of money/or movable property, only a declaration is drafted and submitted to the competent tax office (D.O.Y), accompanied by a bank transfer receipt confirming the transfer of the money to the child’s bank account (Article 2 of decision No. A.1162/2022 of the Independent Authority for Public Revenue).
- Tax regime:
- As regards parental benefits, a tax free amount of EUR 800,000 applies (Article 56 of Law 4839/2021).
- If the value of the asset or the amount of money exceeds the tax free amount of EUR 800,000, a tax is imposed, which is calculated independently at a rate of 10%.
- The tax liability arises at the time of drawing up the parental gift, hence both the tax regime in force as well as the value of the property are known.
- EU citizens who own real estate in Greece benefit from the tax-free regime, subject to the double tax conventions in force[2] under which they may be subject to an additional tax burden in their home country.
Β. Drawing up a will
- Content of the will:
If a parent does not wish to be deprived totally or partially of the powers deriving from their property at a time before their death, they may draft a will, by which they will leave their property to their children or to whomever they wish, at the time after their death (Article 1710 para. 1 of the Greek Civil Code)
- Procedure for drafting a will:
In order for a will to be valid, it must comply with the following legal formalities:
- Holographic will (Article 1721 para. 1 of the Greek Civil Code):
- is handwritten in its entirety by the hand of the testator,
- dated (day, month and year) and
- signed by them (the signature must be placed at the end of the text) and finally,
- is either kept by them or given to a notary for safekeeping and subsequent publication.
- Public will (Article 1724 of the Greek Civil Code):
- declaration by the testator before a notary,
- in the presence of three witnesses or a notary and a witness during the procedure.
- Secret will (Article 1738 of the Greek Civil Code):
- drafting of the will by the testator,
- delivery of the will to the notary in the presence of three witnesses.
- Tax regime:
Upon succession inheritance tax is imposed, in respect of which:
- A tax free amount of EUR 150,000 applies (Article 29 of Law 2961/2001).
- If the children are minors, a special tax-free limit of up to EUR 400,000 applies (Article 25 para. 2 (g) of Law 2961/2001).
- If the asset exceeds EUR 150,000 or EUR 400,000 respectively, the inheritance tax is applied progressively. From EUR 150,000 to EUR 300,000 a tax of 1% is applicable. For the amount from EUR 300,000 up to EUR 600,000, a 5% tax is provided, while for amounts exceeding EUR 600,000 a 10% tax applies.
- The tax liability arises at the time of the parent’s death and therefore the tax regime and the value of the property are uncertain facts, referring to an unknown point in time.
C. Inactivity-Intestate succession
If the parent remains inactive and does not proceed to any of the aforementioned actions (parental benefit, drawing up a will), the fate of their property is determined by law, which provides for intestate succession (i.e. succession in the absence of a will).
In this case, the children are called first to the inheritance (Article 1813 of the Greek Civil Code) together with the deceased’s spouse (Article 1820 of the Greek Civil Code), the spouse receiving 1/4 of the inheritance and the children 3/4 of the inheritance, equally.
In this case too, inheritance tax is imposed:
- as regards the children, the above-mentioned provisions apply (see above B.3).
- as regards the spouse, a tax free amount of up to EUR 150,000 applies (Article 29 of Law 2961/2001). From EUR 150,000 to 300,000 the tax rate is 1%. From EUR 300,000 and up to EUR 600,000, a tax of 5% applies, while for amounts exceeding EUR 600,000 a tax of 10% applies.
[1] Literature sources:
- Apostolos Georgiadis, Property Law, Sakkoulas, Athens-Thessaloniki, 2012.
- Apostolos Georgiadis, Inheritance Law, P.N. Sakkoulas, Athens, 2014.
- Apostolos Georgiadis, Family Law, Sakkoulas, Athens-Thessaloniki, 2017.
[2] The double tax conventions concluded by Greece are available at the following link: https://www.aade.gr/polites/themata-diethnoys-forologikoy-periehomenoy/keimena-symbaseon-symfonion-apofygis-diplis-forologias-tis-elladas-me.